Policies to reform the agricultural sector in Iraq  (financing policy)

Policies to reform the agricultural sector in Iraq (financing policy)

 

 Prof.dr. Ali Darub kassar

Dept. of Agricultural Economics/ College of Agriculture

University of Anbar

The issue of agricultural sector reform is one of the most important priorities that should be addressed, especially in light of the current global conditions that threaten the emergence of a major economic problem represented by high food prices as well as a decrease in food imports, which necessitates speeding up the issue of agricultural sector reform in Iraq. It is not possible to address the reform process in a small article, so one of the most important policies that play an important role in the reform process will be addressed, which is the financing policy.

Financing Policy:

  The Government  resorted to the policy of lending for the purpose of financing agricultural projects through the Iraqi Agricultural Cooperative Bank or the agricultural initiatives adopted by the ministry in cooperation with some parties. The aim was to encourage farmers and graduates of agricultural and veterinary colleges who are not employees in government  departments to enter agricultural projects. The Agricultural Cooperative Bank of Iraq made a good contribution to the lending process, despite the obstacles it faced. During the period (1976-1986) the mentioned bank provided several types of loans. Medium-term loans occupied 43% of the total loans, while short-term loans represented 36% and long-term 15%. The bank's policy has been flexible towards recovering loans granted to agricultural cooperatives, as they enjoy immunity, which led to the failure to take any action against them in the event of their late payment, which is an unhealthy phenomenon. And the phenomenon of delays in loan recovery continued until after 2003. One of the studies that addressed the issue of evaluating the performance of the Iraqi Agricultural Bank during the period 2003-2008 confirmed the following results:-

1- Decline in the achievement efficacy criterion. The value of the collection index at its highest percentage reached 19.21% in 2007

2- The percentage of overdue loan collection ratio index reached its highest value in 2008 at 3.49%.

3- The index of the time classification of arrears achieved its highest value in 2008, 53.63%.

4- The indicator of the percentage of overdue amounts of the total outstanding loans achieved its highest value in 2008, 1.54%.

5- As for the indicator of the general collection ratios to the arrears ratios, the collection rates generally outperformed the arrears rates, as the highest value of collections reached 19.21% in 2007 compared to 3.49% as the highest rates of arrears in 2008.

6- The repayment index reached its highest value of 0.19% in 2007

From points  mentioned above, we find a significant decline in the performance of the Agricultural Bank, which affects the nature of the financing policy.

As for the agricultural initiative, it was found that the most important thing that has been reached in this regard is the difference in the policy of lending to the agricultural initiative and the policy of lending to cooperative agricultural exchange. As well as the inability to determine the negative and positive returns of the agricultural initiative, as well as the failure to adopt the principles of transparency and disclosure when preparing reports and financial statements for the agricultural initiative and the agricultural bank. The absence of criteria and indicators for evaluating the performance of the bank in general and the process of granting loans in particular, and the conflict between the lending policy of the Cooperative Agricultural Bank and the lending policy of the agricultural initiative, were all factors that led to the agricultural initiative not achieving its full objectives. Although the agricultural initiative contributed to increasing the amounts of loans granted by the Cooperative Agricultural Bank during the study period. However, the weakness of the supervisory measures taken by the internal and external control of the bank regarding the follow-up of the agricultural cooperative bank's compliance with the generally accepted instructions, laws and fortified procedures was not an encouraging factor in the success of the agricultural initiative in an encouraging way.

In summary, the financing policy was a noble goal and in the interest of the agricultural sector, but its implementation was faltering, as indicated by the studies that addressed this issue, which led to the loss of a lot of money or wasted in its place, and despite the legislation that was enacted to protect these funds, it was a control of operations Corruption that may arise, but the circumvention of these legislations was present by some weak-minded people. Therefore, the efforts of the agricultural departments and the competent ministries were persistent and persistent, but the spread of corruption has always been an obstacle to reform processes in every sector.

 

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